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Declining Sales Volume Ahead For US Real Estate, Economist Warns

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Interest rates are creeping up, confidence in the dollar is waning and real estate transaction volume keeps slipping despite an abundance of investment capital.

Combine those factors and you have a recipe for a looming recession, according to economist Hugh Kelly.

“It’s not just about preparing ourselves for a slowdown three, four years down the road, but also for a contraction,” said Hugh Kelly, principal of Hugh Kelly Real Estate Economics, at CREW-Miami’s 2018 Economic Outlook luncheon in Miami on Wednesday. “Now is the time to begin thinking about how do you prosper in economic contracting conditions.”

Kelly offered a sobering overview of trends that he believes mark the downside of the current cycle.

“Ambitious projections of growth are not going to be achieved,” Kelly said. “I see another year in declining volume in the real estate business.”

The chances of the country’s economic recovery, the second longest in the nation’s history, continuing into next year are not looking good, Kelly noted. “Keeping it going into the summer of 2019, I think, is a riskier bet,” he said. “Confidence in the U.S. dollar and in our ability to sustain the amount of growth we have been seeing is slipping. These are reasons we should begin to prepare for the end of the cycle.”

An alarming uptick in natural disasters is another factor that will hurt the real estate industry in the next decade, Kelly said, which should raise alarms in hurricane-prone South Florida. In the 1980s, there were 43 natural catastrophes on an annual basis around the world, Kelly said. Since 2011, the number has jumped to 82 per year.

That means home insurance premiums are likely to go up and could have a negative impact on residential home sales. Storms, wildfires and floods resulted in nearly $300 billion in insurance claims last year, Kelly said.

“There are only two ways for insurers to pay for increasing costs,” he added. “Either increase premiums or dip into investment returns. When you have $289 billion in claims, that is going to be costly for everybody.”

 

Source:  The Real Deal

The Forum Office Buildings Trade In $22.5 Million Deal

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CBRE arranged the sale of The Forum in West Palm Beach.

The 185,089 sq.ft. property, consisting of two multi-tenant office buildings and a four-story structured parking garage, is located at 1665 Palm Beach Lakes Blvd.

A subsidiary of Triarch Capital Group acquired the property for $22.5 million.

CBRE’s Miami-based Capital Markets team facilitated the sale on behalf of the seller, Crimson Peak and Panther Capital Management. Vice Chairman Christian Lee oversaw the transaction alongside Senior Vice President José Lobón and Vice President Amy Julian. The Capital Markets team representing the seller also included Financial Analysts Marcos Minaya and Joseph Chick.

Neil Merin of NAI/Merin Hunter Codman and Jonathan Kingsley of Colliers also worked on the transaction.

“The Forum features unparalleled connectivity to Interstate 95, great access to West Palm Beach’s major transportation hubs, the highest covered parking ratio among its peers and an unrivaled amenity base that includes an on-site hotel that will become the winter home to the Houston Astros,” said Christian Lee, vice chairman, CBRE Capital Markets.

Located a half mile east of Interstate 95, the property offers tremendous transportation dynamics–over half of South Florida’s 6 million residents live within a one-hour drive from the property. Additionally, the property is adjacent to the Palm Beach Outlet mall.

“The West Palm Beach submarket has seen five straight years of positive net absorption resulting in a 670-basis point decline in vacancy and 18% market rent growth,” commented José Lobón, Senior Vice President, CBRE Capital Markets. “Combined with a lack of any new office construction underway in the submarket, the outlook is positive for further vacancy decline and market rent growth.”

 

Boca Raton Office Complex Has New Owner

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Fountain Square, a 241,000-square-foot office complex in Boca Raton, traded for $54.5 million — a 47 percent increase over what it sold for three years ago.

Bridge Investment Group Partners of Sandy, UT bought the three-building development at 2600, 2650 and 2700 N. Military Trail from a joint venture between affiliates of Contrarian Capital Management LLC of Greenwich, CT, and NAI/Merin Hunter Codman in West Palm Beach.

The sellers bought the property for $37 million in 2014 from JP Morgan, which paid $63.5 million in 2007.

NAI launched a multimillion dollar capital improvement program to upgrade common areas and tenant suites. That resulted in more than 100,000 square feet of leases in the past two years and boosted occupancy from 62 percent to 90 percent.

The owners filled the building by negotiating leases for $15 and $16 per square foot, according to Neil Merin, chairman of NAI Merin Hunter Codman. He said rents today are in the range of $22 to $23 per square foot.

“It’s a real marker for the recovery of values in Florida,” Merin told CoStar News. “We did well — no doubt about it.”

 

Gil Tenzer, portfolio manager and director of real estate investments at Contrarian, said, “Fountain Square represents our commitment to partnering with local operators to invest in and turn around under-performing assets with high potential.”

Christian Lee and Jose Lobon of CBRE and Neil Merin, of NAI Merin Hunter Codman, represented the seller. The buyer did not have representation.

 

Source:  CoStar

Industry Veterans Launch New Brokerage Firm, Hit Ground Running With 120,000 SF Assignment

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South Florida commercial real estate brokers Patrick Conness and Mike Crissy are pleased to announce the launch of their newly formed company, Conness Crissy Real Estate Advisors (CCREA), a boutique brokerage and advisory firm based in Fort Lauderdale.

With over 30 years of combined industry expertise, the duo boasts a successful track record of representing local business owners as well as Fortune 500 companies throughout South Florida, including notable clients’ City Furniture, Sunbelt Rentals, West Marine, GE Aviation, Atlantic Southern Paving, and Delta Apparel. Their trusted relationships with these firms and their deep roots in the community have been instrumental to their success.

Patrick and Mike’s partnership began in 2013 at Stiles Realty. They have individually worked for several renowned firms previously, including Massey Knakal Realty, Jones Lang LaSalle, Berger Commercial Realty and The Staubach Company.

“We’ve been fortunate to have had the opportunity to work for some of the most well-respected brokerage firms in the industry,” commented Conness. “With our new venture, we’ve taken the good from each of these companies and combined them with our own methods. We see a lot of room for improvement in the brokerage business and now have the opportunity to offer our clients a unique platform that will help them achieve their real-estate focused goals.”

“As Fort Lauderdale natives, we feel a deep connection to our hometown and are committed to helping property owners and businesses succeed, added Crissy. “We have built trusted and long-standing relationships with some of the best South Florida real estate brokers, lenders, attorneys, contractors, and other industry professionals that are necessary to complete a commercial transaction. We are building winning teams that are producing positive results for our clients.”

As part of their first order of business, CCREA has been engaged by IBB USA to offer advisory services on its 120,000-square-foot headquarter facility in Sawgrass International Corporate Park in Sunrise.

With offices in New York, London, Bangkok, Paris & Tel Aviv, IBB USA is an international jewelry design company that distributes product to major retailers such as Kohl’s, Amazon, Belk, Macy’s and Zales.

IBB USA is currently building out 9,000 SF of office space for their executives on the second floor and will have +/-33,500 SF coming available in April 2018. With a 7 per 1000 square feet parking ratio and attractive lease rate, the available space is ideal for any tenants with high parking requirements.

The entire building will be extensively renovated, enhancing the overall curb appeal of the asset. Additionally, IBB USA has excess land adjacent to its headquarters and has plans to build either a 35,000 SF office building or a 40,000 SF industrial building, which CCREA will be marketing in 2018.

“We are in the preliminary stages of planning this project, but early interest has been very encouraging,” explained Crissy. “We are in a unique position of having the flexibility to respond to market demand by offering either office, industrial or flex space.”

 

 

Ryan Nunes Joins JLL As Executive VP

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As JLL expands its footprint in South Florida’s commercial real estate market and grows its best-in-class brokerage team, the firm announces the hiring of Ryan Nunes as Executive Vice President of the firm’s Broward and Palm Beach offices.

In his role, Mr. Nunes will work closely with JLL’s South Florida leadership to help drive business development, support talent recruitment and advancement, and act as a brand ambassador by playing an active role in the firm’s community engagement. He will also serve as a member of JLL’s South Florida Leadership Council.

With more than 12 years of experience advising corporate users and executing complex transactions, Mr. Nunes has worked with businesses ranging from Fortune 500 Companies to early-stage enterprises on successfully structuring real estate strategies that meet their financial and operational objectives.

Prior to joining JLL, he served as Vice President at CBRE for five years, focusing on providing tenant advisory services in South Florida. Before that, he worked for Studley in Washington, DC for seven years.

 

“As we add top talent to our team of trusted advisors in South Florida, Ryan will play a critical role in scaling our team’s intellectual capital to expand our market footprint in the Broward and Palm Beach markets. He will join a top-performing brokerage team that specializes in serving clients across all three South Florida counties,” said JLL Managing Director Alan Kleber. “Ryan’s ability to serve clients as a trusted advisor and commitment to serving his community are qualities that make him a great fit for the team and culture JLL is building in the region.”

Mr. Nunes has extensive experience developing business strategies and real estate solutions on behalf of public and private sector clients for multi-market real estate pursuits, with a focus on serving clients in the Broward and Palm Beach markets. Among the companies he has represented regionally and internationally are Convey Health Solutions, Princess Cruise Lines, Fanatics and the City of Fort Lauderdale.

 

“Joining JLL gives me the opportunity to become part of a best-in-class organization that is highly invested in cultivating talent, as it continues to grow its presence as a market leader across South Florida,” Mr. Nunes said. “I look forward to further expanding our business footprint and market share in Broward and Palm Beach, while also strengthening our culture and supporting our team of talented advisors in their professional growth.”

Mr. Nunes earned a bachelor of arts degree in sociology from the University of Pennsylvania. He has served as a guest lecturer at Georgetown University’s McDonough School of Business and Catholic University’s Columbus School of Law.

Cushman & Wakefield Negotiates 60,000 SF In Office Leases In Pembroke Pines

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Cushman & Wakefield announced that it has negotiated seven new office leases at Pembroke Pointe 880 totaling 59,130 square feet.

The office leasing team of Executive Director Deanna Lobinsky, Executive Director Travis Herring, Director Katherine Ridgway and Associate Chase Kulp executed the leases on behalf of building owner and developer Duke Realty.

Pembroke Pointe 880 is a 143,355-square-foot Class A office building developed in 2015. Lobinsky, Herring, Ridgway and Kulp were selected to lease the building by Duke Realty in October 2016. The team has secured leases with DeVry Education Group; Evolution Lighting, LLC; CoreStaff; Boxy Charm; Costa Cruise Lines; Kronos; and QEO Group, LLC.

“We have been very pleased with the leasing velocity at Pembroke Pointe 880 this year. The property is uniquely positioned in the tight Broward County office market to capitalize on the pent-up demand for new, accessible Class A space in a state-of-the-art building,” said Lobinsky. “We’ve also been extremely fortunate to work with a very proactive owner in Duke Realty. They’ve put an incredible team in place and allotted the resources needed to assist in lease-up.”

DeVry Education Group

DeVry Education Group leased 13,980 square feet at Pembroke Pointe 880, expanding its presence in the Southwest Broward submarket.

DeVry Education Group is a leading global education provider and the parent organization of American University of the Caribbean School of Medicine, Becker Professional Education, Carrington College, Chamberlain College of Nursing, DeVry Education of Brazil, DeVry University and its Keller Graduate School of Management, Ross University School of Medicine and Ross University School of Veterinary Medicine.

Rashid Siahpoosh of Newmark Grubb Knight Frank represented DeVry Education Group in the lease negotiations.

Evolution Lighting, LLC

Evolution Lighting LLC leased 9,684 at Pembroke Pointe 880, relocating its headquarters from Miami. The lighting manufacturer and distributor provides high-end light fixtures throughout North and South America from its offices and warehouses in Connecticut, North Carolina, Mississippi and Ontario, Canada. Evolution Lighting LLC employs 45 people at Pembroke Pointe 880.

Senior Vice President Doug Okun of Continental Real Estate Companies negotiated the lease on behalf of Evolution Lighting, LLC.

CoreStaff

CoreStaff, a Houston-based staffing company, leased 8,072 square feet at Pembroke Pointe 880 to serve as a regional office for 36 employees. CoreStaff specializes in staffing positions in accounting and finance; administrative and clerical; call center and customer care; human resources, information, records management and library services; as well as light industrial and assembly.

Associate Director Clay Sidner of Newmark Knight Frank represented CoreStaff in the lease negotiations.

Boxy Charm

Boxy Charm leased 11,032 square feet for its headquarters at Pembroke Pointe 880. The Miami-based beauty product distributer employs 65 people in this space.

Irving Diaz, Managing Director of Office Equities, negotiated the lease on behalf of Boxy Charm.

Costa Cruise Lines

Genoa, Italy-based cruise line Costa Cruises leased 4,256 square feet at Pembroke Pointe 880. The Carnival Corporation subsidiary, which currently operates a fleet of 15 ships, relocated its U.S. headquarters and 30 employees from Hollywood, FL.

Doug Campbell, President of the Campbell Group, represented Costa Cruise Lines in the lease negotiations.

Kronos

Kronos leased 7,175 square feet at Pembroke Pointe 880. The Lowell, MA-based company, which employs 5,300 people worldwide, provides cloud applications for workforce management as well as consulting, education and support services. Kronos employs 40 people at Pembroke Pointe 880.

Director Ryan Levy of Cushman & Wakefield represented Kronos.

QEO Group, LLC

Irving, TX-based QEO Group, LLC leased 4,931 square feet at Pembroke Pointe 880 where it employs 20 people in a second corporate office. QEO Group, LLC provides commercial transportation insurance, specializing in the energy, local delivery and construction industries.

Executive Director Jeff Holding and Senior Director A.J. Belt of Cushman & Wakefield negotiated the lease on behalf of QEO Group, LLC.

Pembroke Pointe 880 features 36,111-square-foot floor plates designed for maximum efficiency and space utilization; upscale lobby and common areas; ample parking for tenants (5.5 parking spaces per 1,000 rentable square feet); and Interstate 75 frontage with high-visibility signage opportunities. The building is currently 86 percent leased.